REG-Ashmore Group Plc Preliminary Results - Part 1

Released : 15/09/2009

http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20090915:RnsO0444Z
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RNS Number : 0444Z  
  
Ashmore Group PLC  
  
15 September 2009  
  
Ashmore Group plc  
  
15 September 2009  
  
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009  
  
Ashmore Group plc, one of the world's leading emerging market investment 
managers, today announces its audited results for the year ended 30 June 2009.  
  
Financial highlights  
  
 
 * Profit before tax of £159.8 million, a decrease of 19% from FY2008 (£196.2 
million) 
 * Total net revenue of £203.5million, a decrease of 15% from FY2008 
(£240.0million)  
  
                 -   Net management fees up by 1% to £183.2 million   
  
                 -   Performance fees of £52.5 million (FY2008: £44.7 million)   
  
                 -   Foreign exchange hedging cost of £42.4 million, of which 
£4.1 million relates to future periods  
  
 
 * Operating margin of 74.5% (FY2008: 76.0%) 
 * Final AuM of US$24.9 billion down US$12.6bn (34%) from US$37.5 billion at 30 
June 2008 (31 December 2008: US$24.6 billion). 
 * Basic earnings per share of 17.1p (FY 2008: 21.0p) 
 * 8.34p final dividend, making a full year dividend of 12.0p  
  
Mark Coombs, Chief Executive Officer, Ashmore Group said:  
  
"This year's results were broadly satisfactory within the context of the 
extraordinary global market conditions. After a period of net outflows, AuM 
increased in the final quarter to close at a level of US$24.9 billion.  July and 
August have seen net inflows, following the trend established in May and June.  
  
"The reshaping of the emerging markets role within the global order has received 
a significant boost in the last year.  As emerging markets make up a greater 
proportion of the world's markets, the long term trend of an increasing 
allocation from investors towards them continues to be very positive for 
Ashmore.  
  
"There are many initiatives that are being worked upon across the firm which we 
anticipate will bring significant value over the coming years."  
  
Analysts/investors briefing   
  
There will be a presentation for analysts at 09.00 on 15 September at the 
offices of  
  
Goldman Sachs at Peterborough Court, 133 Fleet Street, London EC4A 2BB. A copy 
of the  
  
presentation will be made available on the Group's website at 
www.ashmoregroup.com  
  
Contacts  
  
For further information please contact:  
  
 
  Ashmore Group plc         Penrose Financial                       
                            ashmore@penrose.co.uk                   
                                                                    
  Graeme Dell               Gay Collins           Clare Milton      
  Group Finance Director    +44 20 7786 4888 /    +44 20 7786 4874  
  +44 20 3077 6000          +44 7798 626 282                        
  
  
Chairman's Statement   
  
The year to 30 June 2009 was one of unprecedented turbulence in the global 
economy which resulted in an extreme reduction in the levels of leverage 
deployed across the world and a significant reduction of liquidity and increased 
volatility throughout world markets.  As the year ended, there were some signs 
of a recovery in markets with a more stable set of conditions prevailing. 
Against this background, Ashmore Group ("Ashmore" or, the "Group") has had a 
broadly satisfactory year with profit before tax of £159.8 million (year ended 
30 June 2008: £196.2 million).  
  
Over the last year the Group has concentrated on its core capabilities of 
product innovation, asset raising / retention, good investment performance and 
excellent client service. At the same time, it has continued to strengthen the 
business through the recruitment of additional talented individuals within the 
central and local asset management businesses and through the introduction of 
enhanced core systems and operating processes. The Chief Executive Officer's 
Statement and the Business Review provide further detail on these activities.   
  
In recognition of the financial performance and our confidence in the Group's 
future prospects, the directors are recommending a final dividend of 8.34p for 
the year ended 30 June 2009 which, subject to shareholder approval, will be paid 
on 4 December 2009 to all shareholders who are on the register on 6 November 
2009. This makes a total dividend of 12.0p for the year (2008:12.0p).  
  
During the year ended 30 June 2009, the following Board changes occurred.  In 
September 2008, Jonathan Asquith joined the Group, having been Vice Chairman and 
Chief Financial Officer at Schroders plc.  Initially he was an independent 
non-executive director and member of the audit committee. Subsequently he has 
become chairman of the remuneration committee. Jonathan's extensive industry 
experience and knowledge have added additional strength to the Board and its 
committee structure. At the Group's AGM in October, Jon Moulton retired, having 
been a non-executive director since the Group was established in 1999.  I should 
like to thank Jon for the very considerable contributions he made over those 10 
years.  In June, the Group announced the appointment to the Board of Melda 
Donnelly, former Chief Executive Officer of Queensland Investment Corporation 
and current Deputy Chairperson of the Victoria Funds Management Corporation.  
Melda has extensive experience of the international pension industry and of 
institutional shareholder best practice. I would like to welcome Melda to the 
Board, and she has also become a member of the audit committee from which I have 
stepped down.  
  
The team at Ashmore is committed to implementing successfully its strategy of 
developing a global specialist emerging markets business, with assets of all 
classes managed both centrally and through developing a number of local asset 
management operations in the key emerging markets.  
  
I would like to thank all the members of the Group for the efforts they continue 
to make towards achieving our goals. The opportunities and challenges that will 
be presented in the future will be significant as the global economic prospects 
become ever more influenced by the emerging markets, where the Group has a track 
record of success, built over many years.   
  
Michael Benson  
  
Chairman  
  
Chief Executive Officer's Statement  
  
The Group's overall financial performance achieved in the year ended 30 June 
2009 was broadly satisfactory within the context of the extraordinary global 
market conditions. In the first half, as a result of significant reductions in 
asset valuations and sharply increased outflows, assets under management (AuM) 
were reduced by a third and after a further small fall in the third quarter the 
final quarter saw an increase to close at a level of US$24.9 billion.   
  
The opportunity presented now for Ashmore is greater than ever as world events 
over the last year have both emphasised and accelerated the increase in the 
significance of the emerging markets within the global economy. We continue to 
see opportunities going forward across the asset classes we operate in, and 
during the last year have further invested in our operating platform to enable 
us to take full advantage of these opportunities.    
  
Assets under Management and Financial Performance  
  
The opening AuM at 30 June 2008 stood at US$37.5 billion. Overall during the 
year, net redemptions of US$7.5 billion (H1 US$5.8 billion, H2 US$1.7 billion) 
and negative investment performance of US$5.1 billion (H1 negative US$7.1 
billion, H2 positive US$2.0 billion) have resulted in final AuM of US$24.9 
billion.  
  
Whilst all investment themes have seen net redemptions across the year, these 
slowed significantly in the second half, which also saw a turnaround in markets 
and investment performance.  The pace of recovery varied by theme, with external 
debt recovering fastest to record a 9% increase in AuM in H2, while local 
currency still had net redemptions that outweighed its positive performance 
during that period. Special situations lagged the listed equity markets, as is 
usual when emerging from stress events, and as we waited for corporate and 
capital market activity - the principal driver of revaluations - to pick up. AuM 
in the theme remained broadly flat in the second half of the year.  Lately there 
have been some positive signs pointing to the re-establishment of the global IPO 
market after an almost complete absence of such activity in the last year.   
  
The Group achieved net revenue for the year of £203.5 million (2008: £240.0 
million) a reduction of 15%. Management fees (net of distribution costs) in 
Sterling terms rose marginally to £183.2 million (2008: £182.0 million), 
reflecting the fact that the reduction in average levels of AuM were offset by 
the strengthening of the US Dollar and the increase in management fee margin. 
Total performance fees for the year were £52.5 million (2008: £44.7 million) an 
increase of 17%, including the maturity of the first Global Special Situations 
Fund in July 2008, and the August 2008 annual performance fees. Other income was 
£6.4 million (2008: £10.1 million), the reduction occurring as a result of 
reduced transaction activity levels. Foreign exchange losses for the full year 
were £38.6 million, comprising £38.3 million realised hedging costs related to 
hedging the US$ denominated management fee income for the period, £4.1 million 
unrealised hedging loss related to the hedging of management fees for future 
periods, and a £3.8 million gain from foreign exchange movements on the Group's 
non Sterling denominated net assets.   
  
After costs of £52.9 million (2008: £58.8 million) and interest income of £9.2 
million (2008: £15.0 million) profit before tax was £159.8 million, a decrease 
of 19% from the previous year. Basic earnings per share for the year were 17.1p 
(2008: 21.0p).   
  
The Impact of the Credit Crisis  
  
The events of the global credit crisis have been extensively documented over the 
last year. There is little merit in recounting them again, rather in looking 
instead at the impact felt in the emerging markets and at our resultant 
opportunity set. It is clear that the crisis did not originate in the emerging 
markets but, in a global crisis as severe as that experienced over the last 
year, no market or sector could be immune from impact.  
  
Ashmore's experienced fund management team have managed funds through 
significant crises before, perhaps most notably in 1994 and 1998.  On this 
occasion the global scale of the crisis was greater but the emerging market 
impacts have been very different.  Unlike the earlier crises the emerging 
markets are now net creditors in global terms and as a result there has been 
relatively little increase in the default risk in Latin America and Asia and 
lower levels of contagion. The impact in those regions has principally been one 
of collateral damage from either reducing cross border flows or a reduction in 
export levels. In Eastern Europe there has been a more direct impact, in part 
due to the greater direct investment from a concentration of EU countries and 
institutions and also to the greater extent to which leverage had been employed 
compared to other emerging market regions.    
  
Following these events, the resultant position is an opportunity in three ways. 
Firstly, in a macro sense we believe that it has accelerated the shift of 
economic weight to, and the bargaining positions of, the emerging markets. The 
G20 London summit saw emerging markets deliverables dominating and indicates 
that the international community recognises that emerging markets will define 
globalisation in the future.   
  
Secondly, based upon Ashmore's experience in managing across cycles through a 
number of past crises we believe the business is well positioned for strong 
investment returns in the future. The investment process employed managing a 
portfolio during periods of market stress is one where the liquidity of a 
portfolio is retained through the purchase of highly liquid instruments, whilst 
adding high embedded value lower liquidity instruments such as special 
situations and corporate high yield to provide significant alpha over the cycle. 
This active management approach is not based on market indices and accepts short 
term mark-to-market declines, often arising simply as a result of wider 
bid-offer spreads in distressed markets, to secure long term gains through the 
acquisition of attractive assets which will appreciate over the medium to long 
term.  We have, as expected, begun to see the start of such outperformance, and 
look to realise further upside.  
  
Thirdly, we are confident Ashmore remains well positioned to raise more AuM in 
the future through the second and third phases of the Group's Strategic 
development - the further diversification of developed world capital sources and 
themes and the mobilisation of growing emerging market capital pools.  Developed 
world capital sources have undoubtedly been the most affected by the events of 
the last 18 months with an extreme reduction in leverage available resulting in 
an overriding reduction in the scale of funds deployed. However, we are 
beginning to receive subscriptions from these pools again, as investors work out 
where their capital should best be allocated. At the same time, levels of 
redemptions, which were predominantly liquidity driven rather than asset 
allocation based, have reduced dramatically from the levels we received during 
the middle of the year ended 30 June 2009.  Capital allocators within those 
largest emerging world sources of capital - central banks, governments/reserve 
managers and sovereign wealth funds - are also seriously assessing greater 
reserve allocations to the emerging markets and so diluting the historic 
dominance of the US dollar in this role. Therefore looking forward, the 
opportunity for greater emerging market significance, strong investment returns 
and AuM growth see Ashmore very well positioned.    
  
Operational Delivery  
  
At the core of Ashmore lies our central investment committee whose established 
investment processes focus on the maintenance of long term outperformance.   
Periods of high market stress drive increased volumes of inputs to those 
processes, including correspondingly greater analysis to enable the best 
investment decisions to be implemented. The investment professionals in all 
themes have been tested extensively this year in successfully implementing 
active investment management decisions.  Some of the public funds with broad 
mandates not tied to benchmarks saw short term underperformance for part of the 
year as we added illiquid assets and subsequently as the special situations 
valuations lagged more liquid investments in the recovery phase. Our long term 
institutional investor base has a good understanding of our approach but 
nevertheless a feature of last year was a significant increase in the time spent 
by our marketing and client relationship teams in reinforcing and enhancing this 
understanding.    
  
In the area of new product launches, the period has naturally seen somewhat 
reduced levels achieved compared with recent periods. The second half saw the 
fifth global special situations fund launched with AuM of US$0.1 billion and in 
May we launched the Global Consolidation & Recovery Fund giving financial 
institutions a way of addressing some or all of their distressed or other 
emerging market balance sheet exposures. In addition to these public fund 
launches, the period saw two new segregated mandates funded in external debt and 
corporate high yield. At the same time we have been working hard on future 
initiatives to provide our clients with further diversification into those asset 
classes where we see significant opportunity in the next one to three years.    
  
It has been another very busy year in the area of infrastructure projects with 
the implementation of a new portfolio management system which, in conjunction 
with the fund accounting system implemented last year, provides the backbone 
upon which to execute our long term fund management strategy. In addition, we 
have deployed new core systems in the human resources and company secretarial 
areas and implemented a new general ledger system. In all cases, these provide 
us with further robust scalable applications that can be used across the Group. 
  
  
The Group's local asset management subsidiaries now operate in Brazil, Turkey 
and India. At the beginning of January we launched equity funds managed in our 
Sao Paulo office mirroring the onshore and offshore fund structures established 
there last year with the local currency funds. All these funds have begun to see 
some subscriptions following the establishment of good opening track records. In 
Turkey, having established the local asset management business in Istanbul 
following regulatory approval in August last year, we launched three Ashmore 
mutual funds in May this year. In India, the period has been a busy one for both 
the locally based special situations team, and our mid market private equity 
venture.   
  
Following the acquisition of a majority interest in Dolomite Capital, a New York 
based emerging market fund of third party funds manager and independent advisor, 
in November we completed the acquisition of the balance before the year ended to 
enable us to consolidate the team with our existing staff and grow our overall 
Ashmore marketing and distribution presence in the United States.  
  
People & Culture   
  
Ashmore has been successful over the long term because we have combined a 
successful operating model with good people and a robust culture. At the heart 
of the culture we believe are two overriding principles - alignment with our 
clients and alignment with our shareholders. The performance of the team at 
Ashmore over the year to 30 June 2009 has been one of immense effort and 
significant achievement in many areas. Nonetheless, as in past years, the 
financial rewards for the team have been reduced, mirroring the negative 
absolute returns delivered by a number of the Group's funds, and by Ashmore's 
shares. This demonstrates the long term nature of our commitment to make returns 
for both our investors and our shareholders. Our culture doesn't change.  
  
The organisation has grown as we have recruited a significant number of people 
into the Ashmore team during the last two years. The experiences we have shared 
in the delivery of investment performance, client management, support and 
infrastructure development over the last year have been stretching, but 
nevertheless highly enjoyable and rewarding. I would like to thank everyone for 
the part they have played over the period in providing Ashmore with the platform 
to seize the significant opportunities going forward and I look forward to us 
all getting on and seizing them.   
  
Performance Fees   
  
Unaudited annual performance fees for the funds with performance years ended 31 
August 2009 (including EMLIP and LCD) were £5.1 million (August 2008: £31.0 
million) which will be recognised in the financial year ended 30 June 2010.   
  
Outlook Statement   
  
The outlook can be assessed from two standpoints, the internal perspective of 
the firm and the external perspective of the markets in which we operate.  Our 
outlook based on the first of these is as positive as at any time I can remember 
as the number of new opportunities, projects and initiatives that are being 
worked upon across the firm is extensive. New funds, new themes, potential 
clients and strategic initiatives are underway which we hope will bring 
significant value over the coming years. July and August have seen net inflows 
and positive investment performance, following the trend established in May and 
June.  
  
As far as the prospects for emerging market investment are concerned we believe 
the reshaping of the emerging markets' role within the global order has received 
a significant boost in the last year.  We are also optimistic that we are seeing 
investors begin to allocate capital again and our challenge remains, as always, 
to persuade them of the compelling investment opportunities presented in the 
emerging markets. The long term trend of an increasing allocation from investors 
towards emerging markets, as these markets make up an ever greater proportion of 
world markets, whether measured by market capitalisation in debt or equity, or 
through alternatives like GDP or growth potential, continues to be very positive 
for Ashmore. The largest source of capital to manage over the long term remains 
the capital from within the emerging markets themselves, and we are increasingly 
focused on this, and on the resources required to access it.  
  
Mark Coombs  
  
Chief Executive Officer  
  
Business Review  
  
Key Performance Indicators  
  
 
                                             Year ended      Year ended    
                                             30 June 2009    30 June2008   
  Year end AuM                               US$ 24.9 bn     US$37.5 bn    
  Average AuM                                US$ 27.7 bn     US$35.3 bn    
  Average net management fee margins (bps)   107bps          103bps        
  Operating profit margin                    74.5%           76.0%         
  Variable compensation ("VC")/ EBVCIT       14.0%           18.2%         
  Year end headcount                         142             93            
  
  
Assets under Management and Fund Flows  
  
Global market conditions during the first half were extremely challenging, 
particularly with the aggressive falls in global markets in the aftermath of 
Lehman's failure on 15 September 2008. The significant fall in valuations, 
coupled with the redemption of assets by clients for liquidity reasons, impacted 
the Group's assets under management.  Inflows fell away, as those clients with 
liquidity held off from making EM allocations in turbulent markets.  Despite 
some signs of stabilisation late on, all relevant indices were down on the 
opening 1 July position by 31 December 2008, some significantly.    
  
As a result, the significant majority of the decline in AuM during the financial 
year occurred between September and December 2008, with a decline from US$37.5 
billion at 30 June 2008 to US$24.6 billion by 31 December 2008, through a 
combination of net redemptions (US$5.8 billion) and adverse performance (US$7.1 
billion).   
  
The second half of the financial year opened with further market falls, which 
again undermined investor confidence and erased some gains made in December. 
Outflows continued on from the first half, at a much reduced rate, and these 
were concentrated in the local currency funds.  At the end of the third quarter 
AuM had fallen a further US$1.1 billion to US$23.5 billion.    
  
Since then, AuM has stabilised, reflecting the improvement in market conditions. 
AuM rose by US$1.4 billion in the fourth quarter to close at US$24.9 billion on 
30 June 2009, US$1.9 billion being attributable to performance and US$0.5 
billion to net outflows, all of which arose in April 2009.  The quarter ended 
with outflows having stabilised, and modest inflows.  This resulted in an 
aggregate uplift in AuM during the second half of US$0.3 billion, being 
attributable to favourable performance of US$2.0 billion, and net outflows of 
US$1.7 billion.    
  
 
                                Year ended 30 June 2009   Year ended 30 June 2009   Year ended 30 June 2008   Year ended 30 June 2008  
  Opening AuM (US$bn)                                     37.5                                                31.6                     
  Gross subscriptions (US$bn)   3.8                                                 11.0                                               
  Gross redemptions (US$bn)     (11.3)                                              (8.0)                                              
  Net subscriptions (US$bn)                               (7.5)                                               3.0                      
  Performance (US$bn)                                     (5.1)                                               2.9                      
                                                                                                                                       
  Closing AuM (US$bn)                                     24.9                                                37.5                     
  
  
Movements in assets under management by investment theme are shown in the tables 
below:-  
  
Year ended 30 June 2008  
  
 
                       AuM Opening    Gross subscriptions    Gross redemptions    Net (redemptions)/    Performance    Closing AuM   
                       (US$bn)        (US$bn)                (US$bn)              subscriptions         (US$bn)        (US$bn)       
                                                                                  (US$bn)                                            
  External debt        21.2           4.8                    (4.8)                0.0                   1.5            22.7          
  Local currency       5.0            4.2                    (1.6)                2.6                   0.9            8.5           
  Special situations   3.4            1.8                    (0.2)                1.6                   0.5            5.5           
  Equity               2.0            0.2                    (1.4)                (1.2)                 0.0            0.8           
                                                                                                                                     
  Total                31.6           11.0                   (8.0)                3.0                   2.9            37.5          
  
  
Year ended 30 June 2009  
  
 
                       AuM Opening    Gross subscriptions    Gross redemptions    Net (redemptions)/    Performance    Closing AuM   
                       (US$bn)        (US$bn)                (US$bn)              subscriptions         (US$bn)        (US$bn)       
                                                                                  (US$bn)                                            
  External debt        22.7           1.7                    (6.0)                (4.3)                 (2.4)          16.0          
  Local currency       8.5            1.5                    (4.2)                (2.7)                 (1.3)          4.5           
  Special situations   5.5            0.5                    (0.6)                (0.1)                 (1.1)          4.3           
  Equity               0.8            0.1                    (0.5)                (0.4)                 (0.3)          0.1           
                                                                                                                                     
  Total                37.5           3.8                    (11.3)               (7.5)                 (5.1)          24.9          
  
  
New funds  
  
The year saw levels of new funds launched reduced from earlier years in terms of 
both numbers of funds and levels of AuM raised. In the public funds category, 4 
funds were launched: the Global Special Situations Fund 5 (US$0.1 billion); the 
Global Consolidated & Recovery Fund (US$0.1 billion); and 2 Brazilian equity 
funds (1 onshore, and an offshore equivalent) managed by our Brazilian local 
asset management subsidiary.  Additionally, 3 dual-branded Turkish mutual funds 
were launched - specialising in Turkish equities, debt, and liquidity 
respectively, managed by our Turkish local asset management subsidiary; and 2 
new segregated mandates won in the period - within the external debt and 
corporate high yield themes.   The Group also laid the foundations in respect of 
a number of other initiatives, which we expect to be a success in FY09/10, 
markets permitting.  
  
The number of funds and levels of AuM can be analysed according to type of fund 
or mandate as outlined below.   
  
 
                              Number of accounts            Percentage of AuM            
                              30 June 2009   30 June 2008   30 June 2009   30 June 2008  
  Ashmore sponsored           32             24             54%            59%           
  Segregated                  14             16             36%            31%           
  Structured product          3              3              2%             4%            
  White label/ dual branded   10             7              8%             9%            
  Total                       59             50             100%           100%          
  
  
Further analysis of AuM   
  
Since becoming listed, AuM has been reported on a quarterly basis for each of 
the core investment themes by external debt, local currency, special situations, 
and equity. Corporate high yield, the most recently launched strategy, is 
included within external debt, from where the majority of funds invested in it 
were drawn. This has meant that multi-strategy funds, where we make the asset 
allocation decision dynamically between the themes, have been included in the 
themes rather than as an AuM category in their own right. The information has 
been presented in this format in the table below for the financial year to 30 
June 2009.    
  
AuM movements by investment theme as managed:-  
  
 
                       AuM at 30 June 08    Net subs/ (reds)    Net performance    AuM at        Net subs/ (reds)    Net performance    AuM at         Avg mgt fee margin   
                       (US$bn)              (US$bn)             (US$bn)            31 Dec 08     (US$bn)             (US$bn)            30 June 09     bps                  
                                                                                   (US$bn)                                              (US$bn)                             
  External debt        22.7                 (3.9)               (4.1)              14.7          (0.4)               1.7                16.0           85                   
  Local currency       8.5                  (1.2)               (1.9)              5.4           (1.5)               0.6                4.5            111                  
  Special situations   5.5                  (0.3)               (0.8)              4.4           0.2                 (0.3)              4.3            195                  
  Equity               0.8                  (0.4)               (0.3)              0.1           -                   -                  0.1            128                  
                                                                                                                                                                            
                                                                                                                                                                            
  Total                37.5                 (5.8)               (7.1)              24.6          (1.7)               2.0                24.9           107                  
  
  
However, as the business has developed, to provide visibility of those 
multi-strategy funds in the manner most relevant to their financial impact on 
the Group's performance, and to provide an additional explicit "other" category 
for new initiatives as they are launched, we intend in future to provide AuM 
analysis by the principal component of the theme by which we are mandated. 
Accordingly, the table below sets out the AuM movement on this basis.    
  
AuM movements by investment theme as classified by mandate:-  
  
 
                         AuM at 30 June 08    Net subs/ (reds)    Net performance    AuM at        Net subs/ (reds)    Net performance    AuM at         Avg mgt       
                         (US$bn)              (US$bn)                                31 Dec 08     (US$bn)                                30 June 09     fee margin    
                                                                  (US$bn)            (US$bn)                           (US$bn)            (US$bn)                      
                                                                                                                                                         bps           
  External debt          20.9                 (3.9)               (3.6)              13.4          (0.6)               1.9                14.7           79            
  Local currency         7.2                  (0.5)               (1.7)              5.0           (1.2)               0.4                4.2            106           
  Special situations     4.6                  (0.4)               (0.7)              3.5           0.1                 (0.3)              3.3            196           
  Equity                 0.5                  (0.1)               (0.3)              0.1           0.0                 0.0                0.1            124           
                                                                                                                                                                       
  Corporate high yield   0.5                  0.0                 (0.1)              0.4           0.1                 0.0                0.5            183           
  Multi-strategy         3.8                  (0.9)               (0.7)              2.2           (0.2)               0.0                2.0            135           
  Other                  0.0                  0.0                 0.0                0.0           0.1                 0.0                0.1            N/M           
                                                                                                                                                                       
                                                                                                                                                                       
  Total                  37.5                 (5.8)               (7.1)              24.6          (1.7)               2.0                24.9           107           
  
  
The change in AuM reporting does not invalidate the basis of reporting AuM by 
the theme that assets are ultimately invested in. Such analysis will demonstrate 
the impact of the allocation of the multi-strategy funds and of cross-over 
investing. Cross-over investment refers to the process whereby funds in one 
investment theme, principally external debt, are permitted to invest a 
proportion of their value into individual assets from other Ashmore themes.    
  
 
                         AuM as mandated at 30 June 2009 US$bn   30 June 2009 % of AuM   AuM as invested in underlying asset class at 30 June   30 June 2009 % of AuM  
                                                                                         2009 US$bn                                                                    
  External debt          14.7                                    58                      13.0                                                   52                     
  Local currency         4.2                                     17                      4.4                                                    18                     
  Special situations     3.3                                     13                      6.0                                                    24                     
  Equity                 0.1                                     1                       0.2                                                    1                      
  Corporate high yield   0.5                                     2                       1.3                                                    5                      
  Multi-strategy         2.0                                     8                       -                                                      -                      
  Other                  0.1                                     1                       -                                                      -                      
  Total                  24.9                                    100                     24.9                                                   100                    
  
  
Investor profile - type and geography  
  
The Group has a broad range of investors in the funds it manages, predominantly 
institutional in type (30 June 2009: 91%; 30 June 2008: 88%), which includes 
banks, insurers, pension providers, corporates, and government agencies. The 
balance comprises 9% high net worth individuals (30 June 2008: 12%).  Ashmore 
does not currently access the Retail market directly, though some institutional 
business, particularly via banks, is intermediated business of this nature.  
  
Within the institutional investor profile, the most significant shift during the 
period has been the increase in corporate pension plans (from 16% to 22%) and 
government investments (from 15% to 21%) as a percentage relative to 2008. The 
investor proportion attributable to banks has, by contrast fallen (from 16% to 
10%), which is to be expected given the liquidity concerns many banks 
experienced during the financial year  
  
Management fee margins and performance fees  
  
As the Group's AuM is predominantly US dollar-based, the majority of management 
and performance fees are also US dollar denominated. The table below therefore 
sets out AuM, net management fees, net management fee margins, and performance 
fees, by theme in US$ - as the best means of analysing the underlying trend of 
management fees, performance fees and margins.   
  
For the purposes of the income statement, these fees are converted into Sterling 
during the year at the appropriate exchange rate. For management fees the 
effective average exchange rate during the period is GBP1:1.62USD. This is 
weighted by reference to the timing and extent of management fees as they arose, 
and compares to a GBP1:1.60 average monthly rate for the financial year 
(un-weighted). The effective average exchange rate during the period for 
performance fees was GBP1:1.84USD, reflecting the crystallisation of the 
majority of these fees in the first quarter of the year (30 June 2009 - 
GBP1:1.60USD; 30 June 2008 - GBP1:1.99USD).  
  
Underlying US dollar management and performance fees  
  
 
                         AuM              AuM              Net management fees to    Proportion of net management fees    Performance fees to    Proportion of performance fees   
                         at               at               30 June 2009              (%)                                  30 June 2009           (%)                              
                         30 June 2008     30 June 2009     (US$m)                                                         (US$m)                                                  
                         (US$bn)          (US$bn)                                                                                                                                 
  External               20.9             14.7             120.9                     40.7                                 31.9                   33.0                             
  debt                                                                                                                                                                            
  Local                  7.2              4.2              58.4                      19.7                                 28.7                   29.7                             
  currency                                                                                                                                                                        
  Special                4.6              3.3              72.0                      24.2                                 32.3                   33.5                             
  situations                                                                                                                                                                      
  Equity                 0.5              0.1              2.2                       0.7                                  0.1                    0.1                              
                                                                                                                                                                                  
  Corporate high yield   0.5              0.5              7.9                       2.7                                  0.1                    0.1                              
  Multi-strategy         3.8              2.0              35.1                      11.8                                 3.4                    3.6                              
                                                                                                                                                                                  
  Other                  0.0              0.1              0.6                       0.2                                  0.0                    0.0                              
                                                                                                                                                                                  
                                                                                                                                                                                  
  Total (US$)            37.5             24.9             297.1                     100%                                 96.5                   100%                             
                                                                                                                                                                                  
  Total (GBP)            18.8             15.1             183.2                     100%                                 52.5                   100%                             
  
  
Management fee margins   
  
The Group's policy of maintaining high and stable management fee margins has 
been continued during the period, despite the volatility in markets and tough 
operating environment for asset managers. Across the first half average net 
management fee margins actually increased relative to FY07/08, as a function of 
the AuM mix, with the timing of outflows at different margins having an impact, 
because of the size of mandate or asset class invested in. However, this 
re-balanced during the second half, such that although the average revenue 
margin for FY08/09 remained 4 bps higher than the 103bps experienced during 
FY07/08, average net management fee margins for the final quarter returned to 
the FY07/08 levels.   
  
Performance fees  
  
It is the Group's policy to maintain a good balance between those funds where 
the Group is eligible to earn performance fees and those that generate revenues 
for the Group solely through management fees. At the year end the Group was 
eligible to earn performance fees on 67% of AuM (2008: 65%), and 61% of funds 
(2008: 60%).  Within those funds that are eligible to generate performance fees, 
14% were ineligible in the year under review, either because such fees are 
earned at the end of the multi-year fund life or; are subject to rebate 
agreements. Total performance fee income for the year ended 30 June 2009 was 
£52.5 million (2008: £44.7 million).  
  
Operating costs and operating margin  
  
The Group maintains a tightly controlled cost structure, but has invested 
significantly in infrastructure in recent periods to provide a platform for 
growth without the need for further comparable support cost expansion. Rather, 
the focus in the coming periods will be on extending our distribution reach, and 
on enhancing the Group's investment capabilities where suitable opportunities 
arise.   
  
Retaining a low proportion of fixed personnel expenses relative to variable 
performance related personnel costs remains core to this philosophy, ensuring 
employees are strongly aligned with fund investors and shareholders. Salaries 
represent the Group's biggest category of fixed cost, so a strict base salary 
cap is enforced. For the year to 30 June 2009 fixed personnel costs increased by 
£4.1 million to £11.5 million (FY07/08: £7.4 million) of total personnel cost of 
£36.0 million (FY07/08: £47.7. million). Variable compensation includes 
performance related bonuses, share based payments and associated social security 
costs. For FY08/09 this fell to £24.5 million, 14.0% as a percentage of earnings 
before variable compensation, interest, and tax 'EBVCIT' (FY07/08: £40.3 
million, 18.2%), reflecting the reduced performance of the business and market 
conditions.  
  
As we highlighted at the time of the interims, the Group executed a planned  
  
  
More to follow, for following part double-click [nRn2O0444Z]